8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) July 13, 2001

LINENS ’N THINGS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of Incorporation) 1-12381
(Commission File Number) 22-3463939
(I.R.S. Employer Identification No.)

6 Brighton Road, Clifton, New Jersey
(Address of Principal Executive Offices) 07015
(Zip Code)

Registrant’s telephone number, including area code (973) 778-1300

Inapplicable
(Former Name or Former Address, if Changed Since Last Report)

INFORMATION TO BE INCLUDED IN THE REPORT

Item 5.  Other Events.

           Supplemental Executive Retirement Plan, Split Dollar Agreement and Collateral Assignment.

           Linens ’n Things, Inc. (the “Company”) adopted a Supplemental Executive Retirement Plan, effective as of January 1, 2002. The Company and Steven B. Silverstein entered into an Executive Life Program Collateral Assignment Split Dollar Agreement (the “Split Dollar Agreement”) dated as of December 1, 2001, whereby the Company agreed to Mr. Silverstein’s eligibility to participate in the Company’s Executive Life Program and Mr. Silverstein agreed to assign an interest in his life insurance policy under the Executive Life Program (the “Policy”) to the Company as collateral to secure repayment of the Company’s premium payments. In accordance with the terms of the Split Dollar Agreement, the Company and Mr. Silverstein executed a Split-Dollar Collateral Assignment whereby Mr. Silverstein assigned his Policy to the Company as collateral security.

           Employment Agreement.

           Linens ’n Things, Inc. and Audrey Schlaepfer entered into an Employment Agreement dated as of July 13, 2001. A copy of the Employment Agreement is attached hereto as an exhibit.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.

Exhibit 99.1 Linens ’n Things, Inc. Supplemental Executive Retirement Plan.

Exhibit 99.2 Split Dollar Agreement dated as of December 1, 2001, between Steven B. Silverstein and the Company.

Exhibit 99.3 Split-Dollar Collateral Assignment dated as of December 1, 2001, between Steven B. Silverstein and the Company.

Exhibit 99.4 Employment Agreement between Linens ’n Things, Inc. and Audrey Schlaepfer dated as of July 13, 2001.

SIGNATURE

           Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  March 26, 2002 LINENS ’N THINGS, INC.


By: WILLIAM T. GILES
——————————————
        William T. Giles
        Chief Financial Officer

EXHIBIT INDEX

Exhibit 99.1 Linens ’n Things, Inc. Supplemental Executive Retirement Plan.

Exhibit 99.2 Split Dollar Agreement dated as of December 1, 2001, between Steven B. Silverstein and the Company.

Exhibit 99.3 Split-Dollar Collateral Assignment dated as of December 1, 2001, between Steven B. Silverstein and the Company.

Exhibit 99.4 Employment Agreement between Linens ’n Things, Inc. and Audrey Schlaepfer dated as of July 13, 2001.

EX-99.1

Linens ’n Things, Inc.
Supplemental Executive Retirement Plan
for Steven Silverstein

Linens ’n Things, Inc.
Supplemental Executive Retirement Plan
for Steven Silverstein

1	Purposes	1
2	Definitions	1
3	Administration	3
4	Participation	4
5	Benefit Amount	4
6	Distributions	4
7	Amendment/Termination	5
8	General Provisions	5
9	Claim and Appeal Procedure	7
10	Effective Date	8
Appendix A		9
Appendix B		10

Linens ’n Things, Inc.
Supplemental Executive Retirement Plan
for Steven Silverstein

     1.     Purposes. The purpose of this Linens ’n Things, Inc. Supplemental Executive Retirement Plan for Steven Silverstein (the “Plan”) is to provide a select group of management or highly compensated employees of Linens ’n Things, Inc. (the “Company”) and its subsidiaries and certain affiliated entities with a nonqualified defined benefit pension benefit.

     2. Definitions. In addition to the terms defined in Section 1 above, the following terms used in the Plan shall have the meanings set forth below:

           (a)“Administrator”shall mean the Committee.

           (b) “Benefit Amount”shall have the meaning set forth in Section 5.

           (c) “Board”shall mean the Board of Directors of the Company.

           (d) “Cause”shall have the meaning set forth in the Participant’s employment agreement. In the event that the Participant is not subject to an employment agreement, or if the Participant’s employment agreement does not define Cause, then Cause shall be defined at the discretion of the Committee.

           (e) “Change of Control” shall be deemed to occur on the date upon which one of the following events occurs:

     (i) any person (other than the Company, any trustee or other fiduciary holding securities under any employee  benefit plan of the Company, or any company owned, directly, or indirectly, by the stockholders of the Company immediately prior to the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common stock of the Company) becomes the Beneficial Owner (except that a person shall be deemed to be the Beneficial Owner of all shares that any such person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the sixty day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or any Significant Subsidiary (as defined below), representing 25% or more of the combined voting power of the Company’s or such subsidiary’s then outstanding securities;

     (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, but excluding for this purpose any such new director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or person other than the Board, cease for any reason to constitute at least a majority of the Board;

     (iii) the consummation of a merger or consolidation of the Company or any subsidiary owning directly or indirectly all or substantially all of the consolidated assets of the Company (a “Significant Subsidiary”) with any other entity, other than a merger or consolidation which would result in the voting securities of the Company or a Significant Subsidiary outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after such merger or consolidation;

     (iv) the stockholders of the Company approve a plan or agreement for the sale or disposition of all or substantially all of the consolidated assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such sale or disposition) in which case the Board shall determine the effective date of the Change in Control resulting therefrom; or

     (v) any other event occurs which the Board determines, in its discretion, would materially alter the structure of the Company or its ownership.

For purposes of this definition, the term “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act (including any successor to such Rule), and the term “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.

           (f) “Code” shall mean the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation (including a proposed regulation) thereunder shall include any successor provisions or regulations.

           (g) “Committee” shall mean the Compensation Committee of the Board. Any function of the Committee may be delegated to such person or committee or entity as may be elected by the Committee.

           (h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act or rule thereunder shall include any successor provisions or rules.

           (i) “Final Average Compensation” shall mean the average of the Participant’s base and bonus taxable compensation (determined without regard to any income deferral elections), but not including income arising from stock option exercise, restricted stock grants and other forms of equity compensation, for the three (3) calendar years (which need not be consecutive) with the Company, its subsidiaries and affiliates, that yield the greatest average. For this purpose, the same calendar years need not be used for determining the largest base and bonus compensation amounts.

           (j) “Participant” shall mean Steven Silverstein, a key management employee of the Company, whose current address is 6 Rivercrest Rd., Riverdale, NY 10471.

           (k) “Plan Year” shall mean the calendar year.

           (l) “Year of Service” shall mean a calendar year in which the Participant was employed by the Company, its predecessors, subsidiaries or its affiliates on a full-time basis for the majority of the business days therein. In the event that the Participant’s employment is terminated by the Company for reasons other than Cause prior to the Participant having been credited with at least ten (10) Years of Service, then the Executive will nevertheless be treated under this Plan as having been credited with ten (10) Years of Service. The preceding sentence, however, applies only for purposes of determining his eligibility for a benefit hereunder under Section 5 (and only applies to a Company– initiated termination); it will not count for purposes of determining the amount of any such benefit under Section 5.

     3. Administration.

           (a) Authority. The Committee shall administer the Plan in accordance with its terms, and shall have all powers necessary to accomplish such purpose, including the power and authority to construe and interpret the Plan, to define the terms used herein, to prescribe, amend and rescind rules and regulations, agreements, forms, and notices relating to the administration of the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. Any actions of the Committee with respect to the Plan shall be conclusive and binding upon all persons interested in the Plan. The Committee may appoint agents and delegate thereto powers and duties under the Plan, except as otherwise limited by the Plan.

           (b) Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer or other employee of the Company or any subsidiary or affiliated entity, the Company’s independent certified public accountants, or any executive compensation consultant, legal counsel, or other professional retained by the Company to assist in the administration of the Plan. To the maximum extent permitted by law, no member of the Committee, nor any person to whom ministerial duties have been delegated, shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan.

     4. Participation. The Administrator will notify the Participant of his participation in the Plan at such time as is deemed appropriate.

     5. Benefit Amount. Upon termination of employment with the Company and its subsidiaries and affiliated entities, the Participant will be entitled to the Benefit Amount hereunder, but only if the Participant has either attained age 55 or completed (or been credited with) ten (10) Years of Service with the Company, its subsidiaries, and/or its affiliated entities as of the date of such termination of employment. If the Participant has not then attained age 55, however, then commencement of the Benefit Amount will not occur until attainment of age 55. The Benefit Amount is equal to an annual annuity amount for the life of the Participant, equal to 1.6% times Final Average Compensation times Years of Service minus the amount set forth in Appendix B. In no event will the Benefit Amount exceed fifty percent (50%) of the Participant’s Final Average Compensation. In the event that the Participant becomes entitled to another defined benefit pension benefit from the Company, its subsidiaries or affiliates, then the Benefit Amount will be reduced by the amount of such other defined benefit pension benefit.

     6. Distributions.

           (a) Form of Payment. The normal form of payment of the Benefit Amount is a single life annuity for the life of the Participant.

           (b) Timing of Payments. Commencement of payment of the Benefit Amount will be as of the first day of the month following the Participant’s termination of employment, if the Participant has then attained age 55, unless otherwise provided herein. If the Participant has not then attained age 55, then commencement of payment of the Benefit Amount will occur at age 55, unless otherwise provided herein. If the Participant is eligible to commence receipt of the Benefit Amount, and elects to defer commencement of such Benefit Amount, then the Benefit Amount shall be adjusted actuarially (using the interest and mortality factors set forth in Appendix A) to reflect the delay in payment.

           (c) Change of Control. Notwithstanding anything else herein to the contrary, upon the occurrence of a Change of Control, the Participant will automatically become fully vested hereunder and have an immediate right to begin receiving the Benefit Amount (regardless of the Participant’s age or Years of Service, and regardless of whether the Participant is then employed by the Company). The Participant need not terminate employment in order to receive the Benefit Amount under this Section 6(c). Upon a Change of Control, the Participant may elect to receive the Benefit Amount in the standard form or in a lump sum (using the interest and mortality factors set forth in Appendix A).

           (d) Disability. In the event that the Participant becomes disabled, within the meaning of the Company’s long term disability plan, and if the Participant has attained age 55 or completed ten (10) Years of Service, and if the Participant has been determined to be disabled and eligible for benefits under the Company’s long term disability plan, then such Participant will begin receiving the Benefit Amount as of the first day of the month following such determination; provided, however, that if the Participant has not then attained age 55, then commencement will not occur until he attains age 55. In such event, however, the Participant may elect to defer commencement of the Benefit Amount until such time as he thereafter elects (but not later than age 65), during which deferral period he shall continue to accrue additional Years of Service for purposes of the Benefit Amount, but his Final Average Compensation shall be determined as of the onset of his disability. In the event that the Participant has neither attained age 55 nor completed ten (10) Years of Service at the time of the onset of disability, then he shall be treated as accruing additional age and Years of Service (but not compensation) during the period of disability, until he has satisfied the criteria for payment hereunder.

           (e) Pre-retirement Death Benefits. In the event that the Participant dies prior to the date as of which payment of the Benefit Amount commences, then no benefit shall be payable under the Plan with respect to the Participant and/or his beneficiary.

           (f) Forfeiture. The Participant will forfeit all rights to the Benefit Amount in the event that he is terminated by the Company for Cause. In addition, in the event that the Participant is determined by the Committee to be an employee, consultant, or independent contractor of a competitor of the Company as defined in the Participant’s employment agreement or otherwise in the one (1) year period following termination of employment, then he will irrevocably forfeit all rights to the Benefit Amount hereunder.

     7. Amendment/Termination. The Committee may, with prospective or retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan at any time without the consent of the Participant, stockholders, or any other person; provided, however, that, without the consent of the Participant, no such action shall adversely affect the rights of the Participant with respect to any rights to payment of benefits accrued as of the date of termination.

     8. General Provisions.

           (a) Limits on Transfer of Awards. Other than by will or the laws of descent and distribution, no right, title or interest of any kind in the Plan shall be transferable or assignable by the Participant or his Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy, execution or other legal or equitable process, nor subject to the debts, contracts, liabilities or engagements, or torts of the Participant or his Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void.

           (b) Receipt and Release. Payments (in any form and from any source) to the Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of the Participant’s Benefit Amount to which the payments relate against the Company or any subsidiary or affiliated entity thereof, the Committee, and the Committee may require the Participant or Beneficiary, as a condition to such payments, to execute a receipt and release to such effect.

           (c) Unfunded Status of Awards: Creation of Trusts. The Plan is intended to constitute an “unfunded”plan for deferred compensation and the Participant shall rely solely on the unsecured promise of the Company or applicable affiliated entity for payment hereunder. With respect to any payment not yet made to the Participant under the Plan, nothing contained in the Plan shall give the Participant any rights that are greater than those of a general unsecured creditor of the Company or the applicable affiliated entity; provided, however, that the Committee may authorize the creation of trusts (including the purchase of certain life insurance products) or make other arrangements to meet the Company’s obligations under the Plan, which trusts or other arrangements shall be consistent with the “unfunded”status of the Plan unless the Committee otherwise determines with the consent of the Participant.

           (d) Compliance. The Participant shall have no right to receive payment (in any form) with respect to his Benefit Amount until legal and contractual obligations of the Company relating to establishment of the Plan and the making of such payments shall have been complied with in full. In addition, the Company shall impose such restrictions on any interest constituting a security as it may deem advisable in order to comply with the Securities Act of 1933, as amended, the requirements of the New York Stock Exchange or any other applicable stock exchange or automated quotation system, any state securities laws applicable to such a transfer, any provision of the Company’s Certificate of Incorporation or Bylaws, or any other law, regulation, or binding contract to which the Company is a party.

           (e) Other Participant Rights. No provision of the Plan or transaction hereunder shall confer upon the Participant any right to be employed by the Company or a subsidiary or affiliate thereof, or to interfere in any way with the right of the Company or a subsidiary or affiliate to increase or decrease the amount of any compensation payable to the Participant. The Plan shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns.

           (f) Tax Withholding. The Company and any subsidiary or affiliated entity shall have the right to deduct from amounts otherwise payable in settlement of a Benefit Amount any sums that federal, state, local or foreign tax law requires to be withheld with respect to such payment.

           Amounts payable under this Plan will be subject to FICA withholding at such times and in such amounts as determined by the Administrator, under Section 3121(v) of the Code and the regulations thereunder. FICA withholding amounts will be withheld from non-deferred compensation or from such other sources (including from the applicable Benefit Amount) as is determined by the Administrator.

           (g) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New Jersey, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.

           (h) Construction. The captions and numbers preceding the sections of the Plan are included solely as a matter of convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular, and male references shall include female and neuter, and vice versa.

           (i) Severability. In the event that any provision of the Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.

           (j) Status. The establishment and maintenance of the rights of Participants and Beneficiaries hereunder shall not vest in the Participant or Beneficiary any right, title or interest in and to any specific assets or benefits except at the time or times and upon the terms and conditions and to the extent expressly set forth in the Plan.

     9. Claim and Appeal Procedure. The Administrator shall provide adequate notice in writing to the Participant or to any Beneficiary ("Claimant") whose claim for benefits under the Plan has been denied. The Administrator's notice to the Claimant shall set forth:

           (a) The specific reason for the denial;

           (b) Specific references to pertinent Plan provisions upon which the Administrator based its denial;

           (c) A description of any additional material and information that is needed; and

           (d) That any appeal the Claimant wishes to make of the adverse determination must be in writing to the Administrator within seventy-five (75) days after receipt of the Administrator’s notice of denial of benefits. The Administrator’s notice must further advise the Claimant that his failure to appeal the action to the Administrator in writing within the seventy-five (75) day period will render the Administrator’s determination final, binding and conclusive.

           If the Claimant should appeal to the Administrator, he, or his duly authorized representative, may submit, in writing, whatever issues and comments he or his duly authorized representative feels are pertinent. The Claimant, or his duly authorized representative, may review pertinent Plan documents. The Administrator shall re-examine all facts to the appeal and make a final determination as to whether the denial of benefits is justified under the circumstances. The Administrator shall advise the Claimant of its decision within sixty (60) days of the Claimant’s written request for review, unless special circumstances (such as a hearing) would make the rendering of a decision within the sixty (60) day limit unfeasible, but in no event shall the Administrator render a decision respecting a denial for a claim of benefits later than one hundred twenty (120) days after its receipt of a request for review.

           The Administrator’s notice of denial of benefits shall identify the name and address to whom the Claimant may forward his appeal.

     10. Effective Date. The Plan shall be effective January 1, 2002.

APPENDIX A

     Mortality:   1983 GAM Table (Unisex Variation)

     Interest:   5.5%

APPENDIX B

     For Steven Silverstein, the annual Benefit Amount, as defined in Section 5, shall be reduced by the amount determined below (but not below zero) and prorated accordingly between ages.

Age at Termination of Employment	Reduction Amount
55	500,018
54	451,000
53	405,000
52	357,000
51	309,000
50	255,000
49	194,000
48	131,000
47	57,000

EX-99.2

Executive Life Program
Collateral Assignment Split Dollar Agreement

This Split Dollar Agreement is entered into as of 12/01/2001, by and between Steven Silverstein, (the “Employee”) (hereinafter, the Employee or this trust shall be referred to as the “Owner” when referred to in that capacity) and Linens ’n Things, Inc., a Delaware corporation (the “Employer”).

Recitals

           Whereas, Employee is eligible for and wishes to participate in the Employer's Executive Life Program (the “Program”); and

           Whereas, Owner will be the sole owner and possessor of the Policy and assign an interest in the Policy’s death benefit and cash value to the Employer as collateral to secure repayment of Employer’s premium payments with respect to the Policy; and

           Whereas, it is the intent of the Employer and Owner to define the limited extent of the Employer’s security interest in the Policy;

           Now, therefore, Employer and Owner mutually agree that:

(1) Interests in the Policy Cash Values

The Policy, which is the subject of this Split Dollar Agreement, is a variable universal life policy issued by Nationwide Life and Annuity Company (the “Insurer”) Policy Number NO56205610, on the life of the Employee. The interests of the respective parties to this Agreement in the cash value of the Policy shall be apportioned in the following manner:

The first part shall be equal to the total amount of the premium payments made on the Policy (including any contributions made to the Insurer in the event of a Change in Control as provided below), which shall be considered part of the “Employer’s Interest”;

The second part shall be equal to the excess, if any over the first part, but only to the extent of the amount set forth in the attached Schedule A (which may be modified from time to time by mutual agreement of the Owner and Employer), which shall be considered the “Owner’s Interest”; and,

The third part shall be equal to the excess, if any, over the sum of the first two parts and shall be considered part of the “Employer’s Interest”.

Notwithstanding anything in this Agreement to the contrary, in the event of the bankruptcy or insolvency of the Employer during the term of this Agreement, the Policy, including the Owner’s Interest therein, shall be subject to the claims of creditors of the Employer.

(2) Premium Payments

On or before the due date of each premium payment on the Policies, Employer will pay the entire premium due on the Policy. The Employer will make premium payments as they are due until the termination of service of the Employee with the Employer, or in the event the Employee becomes “disabled” as defined under the Employer-maintained long term disability program, until the Employee’s age 55, provided, however, that upon the happening of a Change in Control Event, the Employer shall pay to the Insurer, in the form of pre-paid premiums, an amount equal to the present value of the remaining premium payments due on the Policy until the Employee attains age 55, such amount to be determined by the Insurer.

The Employee shall have imputed income each year in an amount equal to the annual cost of current death benefit protection on the life of the Employee, measured by the lower of (a) the PS 58 rate, as set forth in Revenue Ruling 55-747 (or the corresponding applicable provision of any future Revenue Ruling), or (b) the Insurer’s current published premium rate for annually renewable term insurance for standard risks.

(3) Death Benefit Amounts

Upon the death of the Employee, and subject to the minimum death benefits provided to the Owner as described below, the death benefit payable to the respective parties to this Agreement shall be paid in the following manner and in the following order:

First, Employer (or the Employer’s designated beneficiaries) shall receive an amount equal to the total amount of the premium payments made on the Policy as of the time of Employee’s death (including any contributions made to the Insurer in the event of a Change in Control as provided below), accumulated at interest at a rate of 3.4% per annum;

Second, the Owner (or the Owner’s designated beneficiaries) shall receive an amount equal to the Owner’s Interest as set forth in the attached Schedule A as of the time of Employee’s death, which may be modified from time to time by mutual agreement of the Owner and Employer, except that in no event, shall the amount of the death benefit to be received by the Owner (or the Owner’s designated beneficiaries) be less than twenty-five thousand dollars ($25,000);

And third, Employer (or the Employer’s designated beneficiaries) shall receive the excess, if any, of the Policy proceeds over the amounts set forth in the prior two paragraphs.

Owner understands that sufficiency of cash value in the Policy to provide expected amounts of death benefit under this Agreement may vary as a result of Policy performance and duration of premium payments and this is in no event guaranteed by the Employer or the Insurer. The Employer makes no representation or warranty as to the merits or risks of the investment performance of the Policy.

(4) Ownership and Rights in the Policy

The Policy will be owned exclusively by the Owner or the Owner’s Assignee (for purposes of this Agreement, Owner’s Assignee shall be included in the definition of Owner). Any rights in the Policy other than those specifically mentioned in this Agreement must be exercised with the written consent of both the Owner and the Employer.

Employer’s Rights. While this Agreement is in effect, the Employer has a security interest in the Policy limited exclusively to: (a) that portion of the cash value of the Policy equal to the Employer’s Interest in the Policy; or (b) the death benefit payable to the Employer as set forth in paragraph 3, above. In addition, prior to the occurrence of a Change in Control Event, the Employer shall have the right to make any investment choices permitted by the Policy with respect to the cash value of the Policy, and Owner shall agree to waive this right prior to the occurrence of a Change in Control Event as long as this Agreement remains in force in accordance with the established procedures of the Insurer. After a Change in Control Event, the Owner shall have the right to make any investment choices permitted by the Policy with respect to the cash value of the Policy.

Owner’s Rights. The Owner’s rights include the right to irrevocably assign any of his or its rights under the Policy, with the consent of the Employer and the Insurer and to select and change beneficiaries to receive Owner’s death benefits. The Owner will not be permitted to borrow against, or partially or totally surrender the Policy as long as the Collateral Assignment remains in force. The Owner shall not be permitted to receive a distribution from the cash value of the Policy prior to the termination of the Employee’s services with the Employer, at which time the Owner may request an annual distribution from the Owner’s Interest in the cash value of the Policy, commencing on the first day of the month coincident with or next following the date the Employee terminates service with the Employer. The distribution shall be made annually and shall be limited to an amount of five hundred thousand and eighteen dollars ($500,018) per year and shall continue for the remainder of the Employee’s lifetime, or until the Owner’s Interest is exhausted.

(5) Assignment of Policy to Secure Employer’s Payments

To secure Employer’s Interest in the Policy under this Agreement, Owner will collaterally assign the Policy to the Employer by signing the separate Collateral Assignment. The Collateral Assignment cannot be altered without the Employer’s, Owner’s, and Insurer’s consent.

(6) Termination of Split Dollar Agreement

This Split Dollar Agreement, and all obligations of the Employer to pay premiums under it, will terminate upon the earliest to occur of the following:

a) Death of the Employee;

b) Written agreement of both the Owner and the Employer to terminate this Agreement;

c) Termination of Employee’s employment with the Employer for Cause;

d) Voluntary termination by the Employee of Employee’s service with the Employer unless;

(i) Employer fails to renew Owner’s Employment Agreement prior to the Employee attaining age 60;

(ii) Termination of service is due to any “Constructive Termination Without Cause” as defined in the Employment Agreement; or

(iii) Employee terminates service with the Employer under an “Approved Early Retirement” or “Normal Retirement” as defined in the Employment Agreement;

e) Failure of the Employee or Owner to complete all necessary requirements for the Insurer to issue a policy, including the waiver of investment choices; and,

f) At the sole discretion of the Employer, upon the Employee entering into Competition with the Employer during the “Restriction Period” as defined in the Employment Agreement.

Upon termination of this Agreement, as set forth above, the Employer shall receive the Employer’s Interest in the Policy as soon as is practical, but in no event shall receipt be later than sixty (60) days from the earliest of the dates listed above. In the event of termination of this Agreement for reason other than the death of the Employee, the Employer’s Interest in the Policy and under this Agreement shall be satisfied either directly from the cash value of the Policy or by direct payment by the Owner, at the discretion of the Owner. In this event, the recovery of the Employer’s Interest shall be limited to the cash value of the Policy at that time. In the event of Termination of this Agreement by reason of the death of the Employee, the Employer’s Interest in the Policy and under this Agreement shall be satisfied through direct payment from the Insurer from the Policy proceeds.

(7) Payment of Proceeds or Cash Value to Employer

Upon receipt of the Employer’s Interest in the Policy, as provided in paragraph 1 above, whether from the Policy or from the Owner, the Employer will release the Collateral Assignment. Upon satisfaction of the Employer’s Interest in the Policy, the Owner shall have unrestricted ownership to the Policy.

Upon termination of this Split Dollar Agreement by reason of the death of the Insured, the Insurer in satisfaction of the Owner’s obligations, will issue a check directly to the Employer as collateral assignee in an amount equal to the Employer’s Interest in the Policy.

(8) Miscellaneous

Not an Employment Agreement. This Split Dollar Agreement does not in any way constitute an employment agreement, and the Employer reserves the right to terminate Employee’s employment to the same extent as though the Split Dollar Agreement did not exist. This Split Dollar Agreement may be amended at any time by written agreement signed on behalf of the Employer and by the Owner.

Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Employer and its successors and assigns, and to the Employee and the Employee’s successors, assigns, heirs, executor or personal representative, and beneficiaries.

Certain Defined Terms. For purposes of this Agreement, the following terms have the meanings set forth below:

“Cause” has the meaning set forth in Section 10(b) of the Employment Agreement.

“Change in Control” has the meaning set forth in Section 10(c) of the Employment Agreement.

“Competition” has the meaning set forth in Section 13(a) of the Employment Agreement.

“Constructive Termination Without Cause” has the meaning set forth in Section 10(c) of the Employment Agreement.

“Employment Agreement” ’means the Employment Agreement dated May 3, 2001 between Employee and Employer.

“Normal Retirement” has the meaning set forth in Section 10(f) of the Employment Agreement.

“Restriction Period” has the meaning set forth in Section 13(b) of the Employment Agreement.

“Termination Without Cause” has the meaning set forth in Section 10(c) of the Employment Agreement.

Notices. Any notice, consent or demand required or permitted under this Agreement shall be made in writing and shall be signed by the party making the notice, consent, or demand. Such notice shall be sent by United States certified mail, postage pre-paid and shall be sent to the other party’s last known address as shown on the records of the Employer. The date of such mailing shall be deemed to be the date of such notice, consent or demand.

Entire Agreement; Amendment of Agreement. This Agreement, including only those provisions of the Employment Agreement specifically referred to above, evidences the entire agreement of the parties with respect the subject matter hereof and supercedes all prior discussions or understandings. This Agreement may be altered, amended or modified, including the addition of any additional policy provisions, only by a written agreement signed by the Employer and the Owner. It shall be the responsibility of the Employer to notify the Insurer of any amendments or changes to this Agreement.

Governing Law. This Agreement shall be governed by and be construed in accordance with the laws of the State of New Jersey.

(9) Named Fiduciary

The Employer is designated as the Named Fiduciary of this Agreement for purposes of the Employee Retirement Income Security Act of 1974, as amended. The business address and telephone number of the Named Fiduciary are as follows:

Linen N Things, Inc.
c/o Corporate Secretary
6 Brighton Rd.
Clifton, NJ 07015

The Named Fiduciary shall have the authority to control and manage the operation and administration of the Executive Life Program, of which this Agreement forms a part thereof. The Named Fiduciary is empowered to construe and interpret the terms of the Program and this Agreement, to supply omissions consistent with the intent of the Program and the Agreement, and to make all determinations and resolve all disputes regarding eligibility for and the amount of, benefits under the Program and Agreement, consistent with the terms of the Policy. The Named Fiduciary may delegate some or all of its duties and responsibilities to another person or entity (e.g. a committee designated by the Employer), including persons who are not Named Fiduciaries. Any decisions and determinations made by the Named Fiduciary (or its delegate) shall be conclusive and binding on all parties. The Named Fiduciary shall have the sole discretion of carrying out its responsibilities. Any person or entity claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan (hereinafter referred to as “Claimant”) shall present the request in writing to the Employer, which shall respond in writing as soon as practicable. If the claim or request is denied, the written notice of denial shall state the reason for denial, with specific reference to the provisions on which the denial is based, a description of any additional material or information required and an explanation of why it is necessary, and an explanation of the program’s claims review procedure.

(10) Claims Procedures

Any person or entity claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan (hereinafter referred to as “Claimant”) shall present the request in writing to the Employer, which shall respond in writing as soon as practicable. If the claim or request is denied, the written notice of denial shall state the reason for denial, with specific reference to the provisions on which the denial is based, a description of any additional material or information required and an explanation of why it is necessary, and an explanation of the program’s claims review procedure.

Review of Claim. Any Claimant whose claim or request is denied or who has not received a response within sixty (60) days may request a review by notice given in writing to the Employer. Such request must be made within sixty (60) days after receipt by the Claimant of the written notice of denial, or in the event Claimant has not received a response sixty (60) days after receipt by the Employer of Claimant’s claim or request. The claim or request shall be reviewed by the Employer which may, but shall not be required to, grant the Claimant a hearing. On review, the Claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

Final Decision. The decision on review shall normally be made within thirty (30) days after the Employer’s receipt of Claimant’s claim or request. If an extension of time is required for a hearing or other special circumstances, the Claimant shall be notified and the time limit shall be sixty (60) days. The decision shall be in writing and shall state the reason and the relevant provisions. All decisions on review shall be final and bind all parties concerned.

IN WITNESS WHEREOF, the Employer and the Owner or the Owner’s Assignee have signed this Split Dollar Agreement, which is effective as of the effective date of the Policy described herein.

BRIAN SILVA
——————————————
Officer of Corporation
SVP Human Resources

MARY ANN BLANCHARD
——————————

Witness

Date:  12/01/2001


STEVEN SILVERSTEIN
——————————

Owner

EX-99.3

SPLIT-DOLLAR COLLATERAL ASSIGNMENT

Owner: Steven Silverstein shall refer to the Employee, Third Party, or Trust, and his/her/its successors and assigns;

Assignee: Linens ’n Things, Inc. shall refer to Employer, and its successors and assigns;

Insurer: Nationwide Life and Annuity Company;

Policy No.: NO56205610;

Insured: Steven Silverstein;

Split Agreement: Dollar shall refer to the Agreement entered into between the Owner and the Assignee dated 12/01/2001, which is the subject of this Collateral Assignment.

In consideration of the Split-Dollar Agreement (the “Agreement”) entered into between the above named Assignee and Owner, Assignee and Owner agree as follows:

a) The above numbered Policy is assigned by Owner to Assignee as collateral security of Owner’s liability to Assignee as defined in the Agreement (the “Assignee’s Interest”), subject to all terms and conditions of the Policy and to all superior liens, if any, which the Insurer may have against the Policy.

b) The rights of the Owner and Assignee are specified in the Agreement. This Collateral Assignment is intended to provide direction to the Insurer as to the required signatures when either or both parties exercise certain policy rights.

In accordance with the Split Dollar Agreement, the parties agree to the following limitations of the ability to exercise the rights provided under the Policy:

Death Benefits

The Assignee shall have the right to receive from the Policy Proceeds, an amount equal to the Assignee’s Interest in the Policy, as defined and modified in the Split Dollar Agreement. The Owner shall have the right to receive the balance, if any, of the Policy Proceeds, but in no event, less than twenty-five thousand dollars ($ 25,000). Each Party shall have the right to designate and change the beneficiary or beneficiaries to receive its portion of the Policy Proceeds payable in accordance with the Split Dollar Agreement.

Cash Values

1. Investment Choices: Prior to a Change in Control as defined in the Split Dollar Agreement, the Assignee shall have the right to exercise any investment choices permitted by the Policy with respect to the cash value of the Policy, and Owner shall agree to waive this right in accordance with the established procedures of the Insurer. After a Change in Control, the Owner shall have the right to exercise any investment choices permitted by the Policy with respect to the cash value of the Policy, and Assignee shall agree to waive this right in accordance with the established procedures of the Insurer. The Insurer may rely on the statement of the Assignee as to whether a Change of Control has occurred. As part of the assignment of this right, Owner waives the right to receive any and all materials ordinarily supplied by the Insurer, and instead directs the Insurer to provide such material directly to the Employer for the duration of this Assignment. Such material shall include, but not be limited to premium notices and billings, confirmation notices, reallocation forms, notices or confirmations, monthly earnings histories, etc

2. Policy Loans and Partial Withdrawals: Neither party shall have the right to request and receive a loan secured by Policy Cash Values without the express, written consent of the other party. Neither party shall have the right to receive a distribution from the cash value of the Policy (in the form of a Cash Withdrawal, Partial Surrender or otherwise) prior to the termination of service by the Insured with the Assignee without the express, written consent of the other party. After the termination of service of the Insured with the Assignee, the Owner shall have the right to receive, or have distributed on the behalf of the Owner, distributions from the Policy Cash Values, but only at the time and in the amount set forth in the Split Dollar Agreement. Insurer may rely on the Assignee’s representation as to the amount so set forth in the Split Dollar Agreement and the manner in which the distribution is to be accomplished.

3.  Termination of the Split Dollar Agreement: In the event of the termination of the Split Dollar Agreement in accordance with the provisions thereof, the Assignee shall have the right to receive an amount equal to its Interest in the Policy payable from the cash values of the Policy. Pursuant to the Split Dollar Agreement, the Owner may exercise the right to satisfy the Assignee’s Interest in the Policy by direct payment to the Assignee.

Miscellaneous Rights

1. Any other rights not provided for in this Collateral Assignment, including the right to surrender the Policy or exercise any non-forfeiture options under the Policy, shall require the written consent of both Owner and Assignee unless otherwise provided.

2. Insurer may rely on the Assignee’s representation as to the amount of the Assignee’s Interest in the Policy in accordance with the Split Dollar Agreement

3. Insurer may act on any request to exercise any right based on the required signatures as set forth in this Collateral Assignment, and Insurer has no duty to investigate the reason for any such exercise. Upon payment of any amounts from the Policy based on this request, during Insured’s lifetime or at death, Insurer shall be fully discharged and released as to its actions.

4. Owner represents that there are no other collateral assignments of the Policy and no proceedings in bankruptcy are pending.

5. This Split-Dollar Collateral Assignment shall be binding upon the parties and their successors, assigns, devisees, personal representatives and other legal representatives.

6. Insurer will not be liable for any action it takes before this Split-Dollar Collateral Assignment is received and acknowledged at the Insurer’s Home Office.

7. In the event of any conflict between the terms specifying the required signatures in this Split-Dollar Collateral Assignment and the signatures required in the Agreement, the terms of this Split-Dollar Collateral Assignment shall prevail as to signatures.

The Owner hereby assigns, transfers, and sets over the Policy to the Assignee, as collateral, to secure the rights of the Assignee as set out in this Collateral Assignment, and for no other purpose. The Policy shall remain subject to this assignment notwithstanding any assignment, transfer or conveyance of the Policy or any interest therein by the Owner. Nothing in this assignment shall change the rights and obligations of the Owner and the Company as set out herein, or in the Split Dollar Agreement as described in the preamble language of this Assignment.

Agreed to this 1st day of December, 2001.

If signing for an entity, the undersigned represents that she/he has authority to bind the entity.

Steven Silverstein
OWNER (Print Name)


By:  STEVEN SILVERSTEIN
——————————————
SIGNATURE OF OWNER

6 Brighton Rd., Clifton, NJ 07015
——————————————
ADDRESS Linens ’n Things, Inc.
ASSIGNEE (Print name of entity or individual)


By: BRIAN SILVA
——————————————
SIGNATURE OF ASSIGNEE
(and if an entity print title of authorized signor)
Sr. V.P. Human Resources

6 Brighton Rd. Clifton, NJ 07015
——————————————
ADDRESS

Filed at the Home Office of the Insurer this ______ day of _______, 20___. Aon Consulting assumes no responsibility for the validity of the contents of this document.

By:
——————————————
Authorized Officer

EX-99.4

LINENS ’N THINGS, INC.

Employment Agreement for Audrey Schlaepfer

		Page
1	Definitions	1
2	Term of Employment	2
3	Position, Duties and Responsibilities	3
4	Base Salary	3
5	Annual Incentive Awards	3
6	Long-Term Stock Incentive Programs	3
7	Employee Benefit Programs	4
8	Disability	5
9	Reimbursement of Business and Other Expenses; Perquisites	6
10	Termination of Employment	6
11	Forfeiture Provisions	16
12	Confidentiality; Cooperation with Regard to Litigation;
	Non-Disparagement; Return of Company Materials	17
13	Non-competition	18
14	Non-solicitation of Employees	19
15	Remedies	19
16	Resolution of Disputes	19
17	Indemnification	20
18	Excise Tax Gross-Up	20
19	Effect of Agreement on Other Benefits	22
20	Assignability; Binding Nature	23
21	Representation	23
22	Entire Agreement	23
23	Amendment or Waiver	23
24	Severability	24
25	Survivorship	24
26	Beneficiaries/References	24
27	Governing Law/Jurisdiction	24
28	Notices	24
29	Headings	25
30	Counterparts	25

EMPLOYMENT AGREEMENT

     AGREEMENT, made and entered into as of the 13^th day of July, 2001 by and among Linens ’n Things, Inc., a Delaware corporation (together with its successors and assigns, the “Company”), and Audrey Schlaepfer (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Company desires to continue to employ Executive pursuant to an agreement embodying the terms of such employment (this “Agreement”) and Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and Executive (individually a “Party” and together the “Parties”) agree as follows:

     1. Definitions.

(a) “Award”  shall have the meaning set forth in Section 11 below.

(b) “Base Salary” shall have the meaning set forth in Section 4 below.

(c) “Board” shall have the meaning set forth in Section 3(a) below.

(d) “Cause”  shall have the meaning set forth in Section 10(b) below.

(e) “Change in Control” shall have the meaning set forth in Section 10(c) below.

(f) “Committee” shall have the meaning set forth in Section 4 below.

(g) “Competition” shall have the meaning set forth in Section 13(a) below.

(h) “Confidential Information” shall have the meaning set forth in Section 12(c) below.

(i) “Constructive Termination Without Cause” shall have the meaning set forth in Section 10(c) below.

(j) “Effective Date” shall have the meaning set forth in Section 2(a) below.

(k) “Fair Market Value” shall have the meaning set forth in Section 6(b) below.

(l) “Forfeiture Event” shall have the meaning set forth in Section 11 below.

(m) “Original Term of Employment” shall have the meaning set forth in Section 2(a) below.

(n) “Renewal Term” shall have the meaning set forth in Section 2(a) below.

(o) “Restriction Period” shall have the meaning set forth in Section 13(b) below.

(p) “Retirement” shall have the meaning set forth in Section 10(f) below.

(q) “Target Performance” shall have the meaning set forth in Section 10(a) below.

(r) “Severance Period” shall have the meaning set forth in Section 10(c)(ii) below, except as provided otherwise in Section 10(e) below.

(s) “Subsidiary” shall have the meaning set forth in Section 12(d) below.

(t) “Term of Employment” shall have the meaning set forth in Section 2(a) below.

     2. Term of Employment.

     (a) The term of Executive’s employment under this Agreement shall commence immediately upon the date of this agreement (the “Effective Date”) and end on the fourth yearly anniversary of the effective date, (the “Original Term of Employment”), unless terminated earlier in accordance herewith. The Original Term of Employment shall be automatically renewed for successive one-year terms (the “Renewal Terms”) unless at least 180 days prior to the expiration of the Original Term of Employment or any Renewal Term, either Party notifies the other Party in writing that he or it is electing to terminate this Agreement at the expiration of the then current Term of Employment. “Term of Employment” shall mean the Original Term of Employment and all Renewal Terms.

     (b)  In the event that this Agreement is not renewed because the Company has given the 180-day notice prescribed in the preceding paragraph on or before the expiration of the Original Term of Employment or any Renewal Term and, in either case, should such notice result in the expiration of the Term of Employment prior to Executive’s 60th birthday, such non-renewal shall be treated as a “Constructive Termination Without Cause” pursuant to Section 10(c).

     (c)  In the event that this Agreement is not renewed because Executive has given the 180-day notice prescribed in Section 2(a) on or before the expiration of the Original Term of Employment or any Renewal Term, such non-renewal shall be treated as a Termination for Cause for the purposes of Sections 10(b)(iii) and 13(b) but not for purposes of Section 11 and Executive shall have the same entitlements as provided in Section 10(b)(iii) below.

     (d)  Notwithstanding anything in this Agreement to the contrary, at least one year prior to the expiration of the Original Term of Employment, upon the written request of the Company or Executive, the Parties shall meet to discuss this Agreement and may agree in writing to modify any of the terms of this Agreement.

3. Position, Duties and Responsibilities.

(a) Generally. Executive shall serve as a senior executive of the Company. Executive shall have and perform such duties, responsibilities, and authorities as shall be specified by the Company from time to time and as are customary for a senior executive of a publicly held corporation of the size, type, and nature of the Company as they may exist from time to time and as are consistent with such position and status. Executive shall devote substantially all of his business time and attention (except for periods of vacation or absence due to illness), and his best efforts, abilities, experience, and talent to his position and the businesses of the Company.

(b) Other Activities. Anything herein to the contrary notwithstanding, nothing in this Agreement shall preclude Executive from (i) serving on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his duties and responsibilities under this Agreement.

(c) Place of Employment. Executive's principal place of employment shall be the principal corporate offices of the Company.

4. Base Salary.

Executive shall be paid an annualized salary, (“Base Salary”) payable in accordance with the regular payroll practices of the Company, of not less than $400,000, subject to review for increase at the discretion of the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”).

5. Annual Incentive Awards.

Executive shall participate in the Company’s annual incentive compensation plan with a target annual incentive award opportunity of no less than 40% of Base Salary and a maximum annual incentive award opportunity of 80% of Base Salary. Payment of annual incentive awards shall be made no later than 75 days after the Company’s fiscal year-end unless Executive agrees otherwise.

6. Long-Term Incentive Programs.

Executive shall be eligible to participate in the Company’s long-term incentive compensation programs including cash and/or stock grants with or without restrictions on a deferred or current basis with a target award opportunity of not less than 15% of Base Salary, and stock option grants.

7. Employee Benefit Programs.

(a) General Benefits.During the Term of Employment, Executive shall be entitled to participate in such employee pension and welfare benefit plans and programs of the Company as are made available to the Company’s senior-level executives or to its employees generally, as such plans or programs may be in effect from time to time, including, without limitation, health, medical, dental, long-term disability, travel accident and life insurance plans. As an officer employee, Executive shall be entitled to participate in the Company’s insured welfare benefit plans and programs.

(b) Deferral of Compensation. The Company shall implement deferral arrangements, reasonably acceptable to Executive and the Company, permitting Executive to elect to defer receipt, pursuant to written deferral election terms and forms (the “Deferral Election Forms”), of all or a specified portion of (i) his annual Base Salary and annual incentive compensation under Sections 4 and 5, (ii) long term incentive compensation under Section 6 and (iii) shares acquired upon exercise of stock options to purchase Company common stock that are acquired in an exercise in which Executive pays the exercise price by the surrender of previously acquired shares, to the extent of the net additional shares otherwise issuable to Executive in such exercise; provided, however, that such deferrals shall not reduce Executive’s total cash compensation in any calendar year below the sum of (A) the FICA maximum taxable wage base plus (B) the amount needed, on an after-tax basis, to enable Executive to pay the 1.45% Medicare tax imposed on his wages in excess of such FICA maximum taxable wage base.

In accordance with such duly executed Deferral Election Forms, the Company shall credit to a bookkeeping account (the “Deferred Compensation Account”) maintained for Executive on the respective payment date or dates, amounts equal to the compensation subject to deferral, such credits to be denominated in cash if the compensation would have been paid in cash but for the deferral or in shares if the compensation would have been paid in shares but for the deferral. An amount of cash equal in value to all cash-denominated amounts credited to Executive’s account and a number of shares of Company common stock equal to the number of shares credited to Executive’s account pursuant to this Section 7(b) shall be transferred as soon as practicable following such crediting by the Company to, and shall be held and invested by, an independent trustee selected by the Company and reasonably acceptable to Executive (a “Trustee”) pursuant to a “rabbi trust” established by the Company in connection with such deferral arrangement and as to which the Trustee shall make investments based on Executive’s investment objectives (including possible investment in publicly traded stocks and bonds, mutual funds, and insurance vehicles). Thereafter, Executive’s deferral accounts will be valued by reference to the value of the assets of the “rabbi trust”. The Company shall pay all costs of administration or maintenance of the deferral arrangement, without deduction or reimbursement from the assets of the “rabbi trust.”

Except as otherwise provided under Section 10, in the event of Executive’s termination of employment with the Company or as otherwise determined by the Committee in the event of Executive’s hardship, upon such date(s) or event(s) set forth in the Deferral Election Forms (including forms filed after deferral but before settlement in which Executive may elect to further defer settlement), the Company shall promptly distribute to Executive any shares of Company common stock credited to Executive’s deferred accounts and pay to Executive cash equal to the value of any other assets then credited to Executive’s deferral accounts, less applicable withholding taxes, and such distribution shall be deemed to fully settle such accounts; provided, however, that the Company may instead settle such accounts by directing the Trustee to distribute such other assets of the “rabbi trust.” The Company and Executive agree that compensation deferred pursuant to this Section 7(b) shall be fully vested and nonforfeitable (subject to Section 11); however, Executive acknowledges that his rights to the deferred compensation provided for in this Section 7(b) shall be no greater than those of a general unsecured creditor of the Company, and that such rights may not be pledged, collateralized, encumbered, hypothecated, or liable for or subject to any lien, obligation, or liability of Executive, or be assignable or transferable by Executive, otherwise than by will or the laws of descent and distribution, provided that Executive may designate one or more beneficiaries to receive any payment of such amounts in the event of his death.

8. Disability.

(a) During the Term of Employment, as well as during the Severance Period, Executive shall be entitled to disability coverage as described in this Section 8(a). In the event Executive becomes disabled, as that term is defined under the Company’s Long-Term Disability Plan, Executive shall be entitled to receive pursuant to the Company’s Long-Term Disability Plan or otherwise, and in place of his Base Salary, an amount equal to 60% of his Base Salary, at the annual rate in effect on the commencement date of his eligibility for the Company’s long-term disability benefits (“Commencement Date”) for a period beginning on the Commencement Date and ending with the earlier to occur of (A) Executive’s attainment of age 65 or (B) Executive’s commencement of retirement benefits from the Company in accordance with Section 10(f) below. If (i) Executive ceases to be disabled during the Term of Employment (as determined in accordance with the terms of the Long-Term Disability Plan), (ii) his position or another senior executive position is then vacant and (iii) the Company requests in writing that he resume such position, he may elect to resume such position by written notice to the Company within 15 days after the Company delivers its request. If he resumes such position, he shall thereafter be entitled to his Base Salary at the annual rate in effect on the Commencement Date and, for the year he resumes his position, a pro rata annual incentive award. If he ceases to be disabled during the Term of Employment and does not resume his position in accordance with the preceding sentence, he shall be treated as if he voluntarily terminated his employment pursuant to Section 10(d) as of the date Executive ceases to be disabled. If Executive is not offered his position or another senior executive position after he ceases to be disabled during the Term of Employment, he shall be treated as if his employment was terminated Without Cause pursuant to Section 10(c) as of the date Executive ceases to be disabled.

(b) Executive shall be entitled to a pro rata annual incentive award for the year in which the Commencement Date occurs based on 40% of Base Salary paid to her during such year prior to the Commencement Date, payable in a lump sum not later than 15 days after the Commencement Date. Executive shall not be entitled to any annual incentive award with respect to the period following the Commencement Date. If Executive recommences his position in accordance with Section 8(a), he shall be entitled to a pro rata annual incentive award for the year he resumes such position and shall thereafter be entitled to annual incentive awards in accordance with Section 5 hereof.

(c) Executive shall be entitled to a pro rata long term incentive award for the period through the Commencement Date based on target performance, payable in a lump sum not later than 15 days after the Commencement Date. Executive shall not be entitled to any long term incentive award with respect to the period following the Commencement Date. If Executive recommences his position in accordance with Section 8(a), he shall be entitled to a pro rata long term incentive award for the period in which he resumes such position and shall thereafter be entitled to long term incentive awards in accordance with Section 6 hereof.

(d) During the period Executive is receiving disability benefits pursuant to Section 8(a) above, he shall continue to be treated as an employee for purposes of all employee benefits and entitlements in which he was participating on the Commencement Date, including without limitation, the benefits and entitlements referred to in Sections 6 and 7 above, except that Executive shall not be entitled to receive any annual salary increases or any new long-term incentive plan grants following the Commencement Date.

9. Reimbursement of Business and Other Expenses.

Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse her for all such business expenses incurred in connection therewith, subject to documentation in accordance with the Company’s policy.

10. Termination of Employment.

(a) Termination Due to Death. In the event Executive’s employment with the Company is terminated due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to and their sole remedies under this Agreement shall be:

(i) Base Salary through the date of death, which shall be paid in a single lump sum not later than 15 days following Executive’s death;

(ii) pro rata annual incentive award for the year in which Executive’s death occurs assuming that Executive would have received an award equal to 40% of Base Salary for such year, which shall be payable in a lump sum promptly (but in no event later than 15 days) after his death;

(iii) elimination of all restrictions on any restricted stock or deferred stock awards outstanding at the time of his death;

(iv) immediate vesting of all outstanding stock options and the right to exercise such stock options for a period of one year following death (or such longer period as may be provided in stock options granted to other similarly situated executive officers of the Company) or for the remainder of the exercise period, if less;

(v) immediate vesting of all outstanding long-term incentive awards and a pro rata payment of such awards based on Target Performance, payable in a lump sum in cash or stock promptly (but in no event later than 15 days) after his death. “Target Performance” for purposes of this Agreement shall mean (i) the actual performance for each completed year under each applicable award, plus (ii) the “target” performance for the then current year under each applicable award;

(vi) the balance of any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive’s death;

(vii) settlement of all deferred compensation arrangements in accordance with Executive’s duly executed Deferral Election Forms; and

(viii) other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

(b) Termination by the Company for Cause.

(i) “Cause” shall mean:

(A) Executive’s willful and material breach of Sections 12, 13 or 14 of this Agreement;

(B) Executive is convicted of a felony involving moral turpitude; or

(C) Executive engages in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out his duties under this Agreement, resulting, in either case, in material harm to the financial condition or reputation of the Company.

For purposes of this Agreement, an act or failure to act on Executive’s part shall be considered “willful” if it was done or omitted to be done by her not in good faith, and shall not include any act or failure to act resulting from any incapacity of Executive.

(ii) A termination for Cause shall not take effect unless the provisions of this paragraph (ii) are complied with. Executive shall be given written notice by the Company of its intention to terminate her for Cause, such notice (A) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (B) to be given within 90 days of the Company’s learning of such act or acts or failure or failures to act. Executive shall have 20 days after the date that such written notice has been given to her in which to cure such conduct, to the extent such cure is possible. If he fails to cure such conduct, Executive shall then be entitled to a hearing before the Committee of the Board at which Executive is entitled to appear. Such hearing shall be held within 25 days of such notice to Executive, provided he requests such hearing within 10 days of the written notice from the Company of the intention to terminate her for Cause. If, within five days following such hearing, Executive is furnished written notice by the Board confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, he shall thereupon be terminated for Cause.

(iii) In the event the Company terminates Executive’s employment for Cause, he shall be entitled to and his sole remedies under this Agreement shall be:

(A) Base Salary through the date of the termination of his employment for Cause, which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(B) any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(C) settlement of all deferred compensation arrangements in accordance with Executive's duly executed Deferral Election Forms; and

(D) other or additional benefits then due or earned in accordance with applicable plans or programs of the Company.

(c) Termination Without Cause or Constructive Termination Without Cause Prior to a Change in Control. In the event Executive’s employment with the Company is terminated without Cause (which termination shall be effective as of the date specified by the Company in a written notice to Executive), other than due to death, or in the event there is a Constructive Termination Without Cause (as defined below), in either case prior to a Change in Control (as defined below) Executive shall be entitled to and his sole remedies under this Agreement shall be:

(i) Base Salary through the date of termination of Executive’s employment, which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(ii) Base Salary, at the annualized rate in effect on the date of termination of Executive’s employment (or in the event a reduction in Base Salary is a basis for a Constructive Termination Without Cause, then the Base Salary in effect immediately prior to such reduction), for a period of 12 months following such termination (the “Severance Period”);

(iii) pro rata annual incentive award for the year in which termination occurs equal to 40% of Base Salary (determined in accordance with Section 10(c)(ii) above) for such year, payable in a lump sum promptly (but in no event later than 15 days) following termination;

(iv) an amount equal to 40% of Base Salary (determined in accordance with Section 10(c)(ii) above), payable in equal monthly payments over the Severance Period;

(v) the balance of any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(vi) settlement of all deferred compensation arrangements in accordance with Executive’s duly executed Deferral Election Forms (unless Executive has previously and appropriately elected not to have such settlement upon such a termination);

(vii) continued participation in all medical, health and life insurance plans at the same benefit level at which he was participating on the date of the termination of his employment until the earlier of:

(A) 24 months; or

(B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided that (1) if Executive is precluded from continuing his participation in any employee benefit plan or program as provided in this clause (vii) of this Section 10(c), he shall receive cash payments equal on an after-tax basis to the cost to her of obtaining the benefits provided under the plan or program in which he is unable to participate for the period specified in this clause (vii) of this Section 10(c), (2) such cost shall be deemed to be the lowest reasonable cost that would be incurred by Executive in obtaining such benefit herself on an individual basis, and (3) payment of such amounts shall be made quarterly in advance;

(viii) 24 months additional age and service credit for purposes of determining the amount Executive’s accrued benefits under any supplemental retirement benefit plan (“SERP”) maintained by the Company, and immediate vesting of any such benefits; and

(ix) other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

     A termination without “Cause” shall mean Executive’s employment is terminated by the Company for any reason other than Cause (as defined in Section 10(b)) or due to death.

“Constructive Termination Without Cause” shall mean a termination of Executive’s employment at his initiative as provided in this Section 10(c) following the occurrence, without Executive’s written consent, of one or more of the following events (except as a result of a prior termination):

(A) an assignment of any duties to Executive which are inconsistent with his status as a senior executive of the Company;

(B) a decrease in annual Base Salary or target annual incentive award opportunity below 40% of Base Salary;

(C) any other failure by the Company to perform any material obligation under, or breach by the Company of any material provision of, this Agreement that is not cured within 30 days; or

(D) any failure to secure the agreement of any successor corporation or other entity to the Company to fully assume the Company’s obligations under this Agreement.

In addition, following a Change in Control, “Constructive Termination Without Cause” shall also mean a termination of Executive’s employment at his initiative as provided in this Section 10(c) following the occurrence, without Executive’s written consent, of a relocation of his principal place of employment outside a 35-mile radius of his principal place of employment as in effect immediately prior to such Change in Control.

A “Change in Control” shall be deemed to have occurred if:

(i) any Person (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company immediately prior to the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common stock of the Company) becomes the Beneficial Owner (except that a Person shall be deemed to be the Beneficial Owner of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the sixty day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or any Significant Subsidiary (as defined below), representing 25% or more of the combined voting power of the Company’s or such subsidiary’s then outstanding securities;

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this paragraph) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved but excluding for this purpose any such new director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or Person other than the Board, cease for any reason to constitute at least a majority of the Board;

(iii) the consummation of a merger or consolidation of the Company or any subsidiary owning directly or indirectly all or substantially all of the consolidated assets of the Company (a “Significant Subsidiary”) with any other entity, other than a merger or consolidation which would result in the voting securities of the Company or a Significant Subsidiary outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after such merger or consolidation;

(iv) the stockholders of the Company approve a plan or agreement for the sale or disposition of all or substantially all of the consolidated assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such sale or disposition) in which case the Board shall reasonably and in good faith determine the effective date of the Change in Control resulting therefrom; or

(v) any other event occurs which the Board determines, in its discretion, would materially alter the structure of the Company or its ownership.

For purposes of this definition:

(A) The term “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act (including any successor to such Rule).

(B) The term “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

(C) The term “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 14(d) thereof.

(d) Voluntary Termination. In the event of a termination of employment by Executive on his own initiative after delivery of 10 business days advance written notice, other than a termination due to death, a Constructive Termination Without Cause, or a Retirement pursuant to Section 10(f) below, Executive shall have the same entitlements as provided in Section 10(b)(iii) above for a termination for Cause, provided that at the Company’s election, furnished in writing to Executive within 15 days following such notice of termination, the Company shall in addition pay Executive 140% of his Base Salary for a period of 12 months following such termination in exchange for Executive not engaging in Competition with the Company or any Subsidiary as set forth in Section 13(a) below. Notwithstanding any implication to the contrary, Executive shall not have the right to terminate his employment with the Company during the Term of Employment except in the event of a Constructive Termination Without Cause or Retirement, and any voluntary termination of employment during the Term of Employment in violation of this Agreement shall be considered a material breach; provided however, if the Company elects to pay Executive 140% of his Base Salary in accordance with this Section 10(d), the Company shall waive any and all claims it may have against Executive for any breach of this Agreement relating to his voluntary termination of employment unless Executive is found by a court of competent jurisdiction not to be in compliance with Section 13(a) below; provided further, however, that notwithstanding anything contained in the foregoing to the contrary, it is not the intention of the Company to waive any claims it may have against any third parties relating to a voluntary termination by Executive in violation of this Agreement.

(e) Termination Without Cause; Constructive Termination Without Cause or Voluntary Termination Following a Change in Control. In the event Executive’s employment with the Company is terminated by the Company without Cause (which termination shall be effective as of the date specified by the Company in a written notice to Executive), other than due to death, or in the event there is a Constructive Termination Without Cause (as defined above), in either case within two years following a Change in Control (as defined above), Executive shall be entitled to and his sole remedies under this Agreement shall be:

(i) Base Salary through the date of termination of Executive’s employment, which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(ii) an amount equal to two times Executive’s Base Salary, at the annualized rate in effect on the date of termination of Executive’s employment (or in the event a reduction in Base Salary is a basis for a Constructive Termination Without Cause, then the Base Salary in effect immediately prior to such reduction), payable in a cash lump sum promptly (but in no event later than 15 days) following Executive’s termination of employment;

(iii) pro rata annual incentive award for the year in which termination occurs assuming that Executive would have received an award equal to 40% of Base Salary (determined in accordance with Section 10(e)(ii) above) for such year, payable in a cash lump sum promptly (but in no event later than 15 days) following Executive’s termination of employment;

(iv) an amount equal to 40% of such Base Salary (determined in accordance with Section 10(e)(ii) above) multiplied by two, payable in a cash lump sum promptly (but in no event later than 15 days) following Executive’s termination of employment;

(v) elimination of all restrictions on any restricted stock or deferred stock awards outstanding at the time of termination of employment;

(vi) immediate vesting of all outstanding stock options and the right to exercise vested stock options granted prior to the Effective Date during the Severance Period or for the remainder of the exercise period, if less; options granted after the Effective Date shall be exercisable for the remainder of the exercise period;

(vii) immediate vesting of all outstanding long-term incentive awards and a pro rata payment of such awards based on Target Performance, payable in a lump sum in cash or stock promptly (but in no event later than 15 days) following Executive’s termination of employment;

(viii) the balance of any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(ix) settlement of all deferred compensation arrangements in accordance with Executive’s duly executed Deferral Election Forms (unless Executive has previously and appropriately elected not to have such settlement upon such a termination);

(x) continued participation in all medical, health and life insurance plans at the same benefit level at which he was participating on the date of termination of his employment until the earlier of:

(A) the end of the Severance Period; or

(B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided that (1) if Executive is precluded from continuing his participation in any employee benefit plan or program as provided in this clause (x) of this Section 10(e), he shall receive cash payments equal on an after-tax basis to the cost to her of obtaining the benefits provided under the plan or program in which he is unable to participate for the period specified in this clause (ix) of this Section 10(e), (2) such cost shall be deemed to be the lowest reasonable cost that would be incurred by Executive in obtaining such benefit herself on an individual basis, and (3) payment of such amounts shall be made quarterly in advance;

(xi) 24 months additional age and service credit for purposes of determining the amount of Executive’s accrued benefits under any SERP maintained by the Company, and immediate vesting of any such benefits; and

(xii) other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

For purposes of any termination pursuant to this Section 10(e), the term “Severance Period” shall mean the period of 24 months following the termination of Executive’s employment.

(f) Retirement. Upon Executive's Retirement (as defined below), Executive shall be entitled to and his sole remedies under this Agreement shall be:

(i) Base Salary through the date of termination of Executive’s employment, which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(ii) pro rata annual incentive award for the year in which termination occurs, based on performance valuation at the end of such year and payable in a cash lump sum promptly (but in no event later than 15 days) thereafter;

(iii) continued vesting (as if Executive remained employed by the Company) of any restricted stock or deferred stock awards outstanding at the time of his termination of employment;

(iv) continued vesting (as if Executive remained employed by the Company) of all outstanding stock options granted after the Effective Date and the right to exercise such stock options for the remainder of the exercise period; and continued vesting of all outstanding options granted prior to the Effective Date and the right to exercise such stock options for a period of one year following the later of the date the options are fully vested or Executive’s termination of employment (or such longer period as may be provided in stock options granted to other similarly situated executive officers of the Company), or for the remainder of the exercise period, if less;

(v) continued vesting (as if Executive remained employed by the Company) of all outstanding long-term incentive awards and payment of such awards based on valuation at the end of the applicable performance periods, payable in a lump sum in cash or the Company’s common stock (with or without restrictions) promptly (but in no event later than 15 days) thereafter;

(vi) the balance of any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive’s termination of employment;

(vii) settlement of all deferred compensation arrangements in accordance with Executive’s duly executed Deferral Election Forms (unless Executive has previously and appropriately elected not to have such settlement at such time);

(viii) continued participation in all medical, health and life insurance plans at the same benefit level at which he was participating on the date of the termination of his employment until the earlier of:

(A) the date upon which Executive attains 65 years of age, provided that the Company shall bear the cost of such insurance until Executive’s ^60th birthday only; thereafter Executive shall reimburse the Company for the cost of such insurance; or

(B) the date, or dates, he receives substantially equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided that (1) if Executive is precluded from continuing his participation in any employee benefit plan or program as provided in this clause (viii) of this Section 10(f), he shall receive cash payments equal on an after-tax basis to the cost to her of obtaining the benefits provided under the plan or program in which he is unable to participate for the period specified in this clause (viii) of this Section 10(f), (2) such cost shall be deemed to be the lowest cost that would be incurred by Executive in obtaining such benefit herself on an individual basis, and (3) payment of such amounts shall be made quarterly in advance; and

(ix) other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

For purposes of this Agreement, “Retirement” shall mean Executive’s voluntary termination of employment with the Company at the earlier of (i) at or after attaining age 55 and 15 years of service with the Company (which shall include all of Executive’s years of service with Melville Corporation), and (ii) attaining age 60.

(g) No Mitigation; No Offset.  In the event of any termination of employment, Executive shall be under no obligation to seek other employment; amounts due Executive under this Agreement shall not be offset by any remuneration attributable to any subsequent employment that he may obtain.

(h) Nature of Payments.  Any amounts due under this Section 10 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

(i) No Further Liability; Release.  In the event of Executive’s termination of employment, payment made and performance by the Company in accordance with this Section 10 shall operate to fully discharge and release the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives from any further obligation or liability with respect to Executive’s rights under this Agreement. Other than payment and performance under this Section 10, the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives shall have no further obligation or liability to Executive or any other person under this Agreement in the event of Executive’s termination of employment. The Company shall have the right to condition the payment of any severance or other amounts pursuant to this Section 10 upon the delivery by Executive to the Company of a release in the form satisfactory to the Company releasing any and all claims Executive may have against the Company and its directors, officers, employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and representatives arising out of this Agreement.

11. Forfeiture Provisions.

(a) Forfeiture of Stock Options and Other Awards and Gains Realized Upon Prior Option Exercises or Award Settlements.  Unless otherwise determined by the Committee, upon a termination of Executive’s employment for Cause, Executive’s engaging in competition with the Company or any Subsidiary after a voluntary termination of employment pursuant to Section 10(d), or Executive’s violation of any of the other restrictive covenants contained in Section 12, 13 or 14 (each a “Forfeiture Event”) during the Term of Employment and for 24 months thereafter, all of the following forfeitures will result:

(i) The unexercised portion of any stock option, whether or not vested, and any other Award not then settled (except for an Award that has not been settled solely due to an elective deferral by Executive and otherwise is not forfeitable in the event of any termination of Executive’s service) will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and

(ii) Executive will be obligated to repay to the Company, in cash, within five business days after demand is made therefor by the Company, the total amount of Award Gain (as defined herein) realized by Executive upon each exercise of a stock option or settlement of an Award (regardless of any elective deferral) that occurred (A) during the period commencing with the date that is 24 months prior to the occurrence of the Forfeiture Event and the date 24 months after the Forfeiture Event, if the Forfeiture Event occurred while Executive was employed by the Company or a Subsidiary or affiliate, or (B) during the period commencing 24 months prior to the date Executive’s employment by the Company terminated and ending 12 months (or, in the event that the Forfeiture Event is a breach of Section 14, 24 months) after the date of such termination, if the Forfeiture Event occurred after Executive ceased to be so employed. For purposes of this Section, the term “Award Gain” shall mean (i), in respect of a given stock option exercise, the product of (X) the Fair Market Value per share of common stock at the date of such exercise (without regard to any subsequent change in the market price of shares) minus the exercise price times (Y) the number of shares as to which the stock option was exercised at that date, and (ii), in respect of any other settlement of an Award granted to Executive, the Fair Market Value of the cash or stock paid or payable to Executive (regardless of any elective deferral) less any cash or the Fair Market Value of any stock or property (other than an Award or award which would have itself then been forfeitable hereunder and excluding any payment of tax withholding) paid by Executive to the Company as a condition of or in connection with such settlement.

For purposes of this Agreement, “Award” shall mean any cash award, stock option, stock appreciation right, restricted stock, deferred stock, bonus stock, dividend equivalent, or other stock-based or performance-based award or similar award, together with any related right or interest, granted to or held by Executive (but excluding any annual cash incentive award which is payable on an annual basis and is determined based entirely on a one-year (or less) performance measurement period).

(b) Committee Discretion. The Committee may, in its discretion, waive in whole or in part the Company’s right to forfeiture under this Section, but no such waiver shall be effective unless evidenced by a writing signed by a duly authorized officer of the Company. In addition, the Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the document evidencing or governing any such Award.

12. Confidentiality: Cooperation with Regard to Litigation; Non-Disparagement; Return of Company Materials.

(a) During the Term of Employment and thereafter, Executive shall not, without the prior written consent of the Company, disclose to anyone (except in good faith in the ordinary course of business to a person who will be advised by Executive to keep such information confidential) or make use of any Confidential Information except in the performance of his duties hereunder or when required to do so by legal process, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) that requires her to divulge, disclose or make accessible such information. In the event that Executive is so ordered, he shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such order.

(b) During the Term of Employment and thereafter, Executive shall not disclose the existence or contents of this Agreement beyond what is disclosed in the proxy statement or documents filed with the government unless and to the extent such disclosure is required by law, by a governmental agency, or in a document required by law to be filed with a governmental agency or in connection with enforcement of his rights under this Agreement. In the event that disclosure is so required, Executive shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such requirement. This restriction shall not apply to such disclosure by her to members of his immediate family, his tax, legal or financial advisors, any lender, or tax authorities, or to potential future employers to the extent necessary, each of whom shall be advised not to disclose such information.

(c) “Confidential Information” shall mean (i) all information concerning the business of the Company or any Subsidiary including information relating to any of their products, product development, trade secrets, customers, suppliers, finances, and business plans and strategies, and (ii) information regarding the organization structure and the names, titles, status, compensation, benefits and other proprietary employment-related aspects of the employees of the Company and the Company’s employment practices. Excluded from the definition of Confidential Information is information (A) that is or becomes part of the public domain, other than through the breach of this Agreement by Executive or (B) regarding the Company’s business or industry properly acquired by Executive in the course of his career as an executive in the Company’s industry and independent of Executive’s employment by the Company. For this purpose, information known or available generally within the trade or industry of the Company or any Subsidiary shall be deemed to be known or available to the public.

(d) "Subsidiary" shall mean any corporation controlled directly or indirectly by the Company.

(e) Executive agrees to cooperate with the Company, during the Term of Employment and thereafter (including following Executive’s termination of employment for any reason), by making herself reasonably available to testify on behalf of the Company or any Subsidiary in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any Subsidiary, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any Subsidiary as requested; provided, however that the same does not materially interfere with his then current professional activities. The Company agrees to reimburse Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance.

(f) Executive agrees that, during the Term of Employment and thereafter (including following Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any Subsidiary or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Term of Employment and thereafter (including following Executive’s termination of employment for any reason) the Company will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may directly or indirectly, disparage Executive or his business or reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude either Executive or the Company from making truthful statements or disclosures that are required by applicable law, regulation, or legal process.

(g) Upon any termination of employment, Executive agrees to deliver any Company property and any documents, notes, drawings, specifications, computer software, data and other materials of any nature pertaining to any Confidential Information that are held by Executive and will not take any of the foregoing, or any reproduction of any of the foregoing, that is embodied an any tangible medium of expression, provided that the foregoing shall not prohibit Executive from retaining his personal phone directories and rolodexes.

13. Non-competition.

(a) During the Restriction Period (as defined in Section 13(b) below), Executive shall not engage in Competition with the Company or any Subsidiary. “Competition” shall mean engaging in any activity, except as provided below, for a Competitor of the Company or any Subsidiary, whether as an employee, consultant, principal, agent, officer, director, partner, shareholder (except as a less than one percent shareholder of a publicly traded company) or otherwise. A “Competitor” shall mean (i) Bed Bath & Beyond, Inc., Home Place Inc., J.C. Penney, Federated Department Stores, Mays, Target, Sears, Home Depot and K-Mart (and any successor or successors thereto); (ii) any home textiles or housewares store, specialty store or other retailer if either $25 million or 40% or more of its annual gross sales revenues (in either case, based on the most recent quarterly or annual financial statements available) are derived from the sale of home textiles, housewares or other goods or merchandise of the types sold in the Company’s (or any Subsidiary’s) stores; (iii) any corporation or other entity whether independent or owned, funded or controlled by any other entity, engaged or organized for the purpose of engaging, in whole or in part, in the sale of home textiles, housewares or other goods or merchandise of the types sold in the Company’s (or any Subsidiary’s) stores; (iv) any business that provides buying office services to any business or group of businesses referred to above, or (v) any business (in the U.S. or any country in which the Company or any Subsidiary operates a store or stores) which is in material competition with the Company or any Subsidiary or division thereof and in which Executive’s functions would be substantially similar to Executive’s functions with the Company. If Executive commences employment or becomes a consultant, principal, agent, officer, director, partner, or shareholder of any entity that is not a Competitor at the time Executive initially becomes employed or becomes a consultant, principal, agent, officer, director, partner, or shareholder of the entity, future activities of such entity shall not result in a violation of this provision unless (x) such activities were contemplated by Executive at the time Executive initially became employed or becomes a consultant, principal, agent, officer, director, partner, or shareholder of the entity or (y) Executive commences directly or indirectly to advise, plan, oversee or manage the activities of an entity which becomes a Competitor during the Restriction Period, that activities are competitive with the activities of the Company or any Subsidiary.

(b) For the purposes of this Section 13, “Restriction Period” shall mean the period beginning with the Effective Date and ending with:

(i) in the case of a termination of Executive’s employment without Cause or a Constructive Termination Without Cause, the Restriction Period shall terminate immediately upon Executive’s termination of employment;

(ii) in the case of a termination of Executive's employment for Cause, 24 months from the date of such termination;

(iii) in the case of a voluntary termination of Executive’s employment pursuant to Section 10(d) above followed by the Company’s election to pay Executive (and subject to the payment of) 140% of his Base Salary, as provided in Section 10(d) above, the first anniversary of such termination;

(iv) in the case of a voluntary termination of Executive’s employment pursuant to Section 10(d) above which is not followed by the Company’s election to pay Executive such 140% of Base Salary, the date of such termination; or

(v) in the case of a Retirement pursuant to Section 10(f) above, the remainder of the Term of Employment.

14. Non-solicitation of Employees.

During the period beginning with the Effective Date and ending 24 months following the termination or other cessation of Executive’s employment for any reason, Executive shall not induce employees of the Company or any Subsidiary to terminate their employment; provided, however, that the foregoing shall not be construed to prevent Executive from engaging in generic nontargeted advertising for employees generally. During such period, Executive shall not hire, either directly or through any employee, agent or representative, any employee of the Company or any Subsidiary or any person who was employed by the Company or any Subsidiary within 180 days of such hiring.

15. Remedies.

In addition to whatever other rights and remedies the Company may have at equity or in law, if Executive breaches any of the provisions contained in Sections 12, 13 or 14 above, the Company (a) shall have its rights under Section 11 of this Agreement, (b) shall have the right to immediately terminate all payments and benefits due under this Agreement and (c) shall have the right to seek injunctive relief. Executive acknowledges that such a breach of Sections 12, 13 or 14 would cause irreparable injury and that money damages would not provide an adequate remedy for the Company; provided, however, the foregoing shall not prevent Executive from contesting the issuance of any such injunction on the ground that no violation or threatened violation of Sections 12, 13 or 14 has occurred.

16. Resolution of Disputes.

Any controversy or claim arising out of or relating to this Agreement or any breach or asserted breach hereof or questioning the validity and binding effect hereof arising under or in connection with this Agreement, other than seeking injunctive relief under Section 15, shall be resolved by binding arbitration, to be held at an office closest to the Company’s principal offices in accordance with the rules and procedures of the American Arbitration Association, except that disputes arising under or in connection with Sections 12, 13 and 14 above shall be submitted to the federal or state courts in the State of New Jersey. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Pending the resolution of any arbitration or court proceeding, the Company shall continue payment of all amounts and benefits due Executive under this Agreement. All reasonable costs and expenses (including fees and disbursements of counsel) incurred by Executive pursuant to this Section 16 shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that in the event the arbitrator(s) determine(s) that any of Executive’s litigation assertions or defenses are determined to be in bad faith or frivolous, no such reimbursements shall be due Executive, and any such expenses already paid to Executive shall be immediately returned by Executive to the Company.

17. Indemnification.

(a) Company Indemnity. The Company agrees that if Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or any Subsidiary or is or was serving at the request of the Company or any Subsidiary as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation or bylaws or resolutions of the Company’s Board or, if greater, by the laws of the State of Delaware against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by Executive in connection therewith, and such indemnification shall continue as to Executive even if he has ceased to be a director, member, officer, employee or agent of the Company or other entity and shall inure to the benefit of Executive’s heirs, executors and administrators. The Company shall advance to Executive all reasonable costs and expenses to be incurred by her in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. The provisions of this Section 17(a) shall not be deemed exclusive of any other rights of indemnification to which Executive may be entitled or which may be granted to her, and it shall be in addition to any rights of indemnification to which he may be entitled under any policy of insurance.

(b) No Presumption Regarding Standard of Conduct. Neither the failure of the Company (including its Board, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by Executive under Section 17(a) above that indemnification of Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its Board, independent legal counsel or stockholders) that Executive has not met such applicable standard of conduct, shall create a presumption that Executive has not met the applicable standard of conduct.

(c) Liability Insurance. The Company agrees to continue and maintain a directors and officers' liability insurance policy covering Executive to the extent the Company provides such coverage for its other executive officers.

18. Excise Tax Gross-Up.

If Executive becomes entitled to one or more payments (with a “payment” including, without limitation, the vesting of an option or other non-cash benefit or property), whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company or any affiliated company (the “Total Payments”), which are or become subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any similar tax that may hereafter be imposed) (the “Excise Tax”), the Company shall pay to Executive at the time specified below an additional amount (the “Gross-up Payment”) (which shall include, without limitation, reimbursement for any penalties and interest that may accrue in respect of such Excise Tax) such that the net amount retained by Executive, after reduction for any Excise Tax (including any penalties or interest thereon) on the Total Payments and any federal, state and local income or employment tax and Excise Tax on the Gross-up Payment provided for by this Section 18, but before reduction for any federal, state, or local income or employment tax on the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b) an amount equal to the product of any deductions disallowed for federal, state, or local income tax purposes because of the inclusion of the Gross-up Payment in Executive’s adjusted gross income multiplied by the highest applicable marginal rate of federal, state, or local income taxation, respectively, for the calendar year in which the Gross-up Payment is to be made. For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:

(i) The Total Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the written opinion of independent compensation consultants, counsel or auditors of nationally recognized standing (“Independent Advisors”) selected by the Company and reasonably acceptable to Executive, the Total Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax;

(ii) The amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the total amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i) above); and

(iii) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

For purposes of determining the amount of the Gross-up Payment, Executive shall be deemed (A) to pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made; (B) to pay any applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of Executive’s adjusted gross income); and (C) to have otherwise allowable deductions for federal, state, and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-up Payment in Executive’s adjusted gross income. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined (but, if previously paid to the taxing authorities, not prior to the time the amount of such reduction is refunded to Executive or otherwise realized as a benefit by Executive) the portion of the Gross-up Payment that would not have been paid if such Excise Tax had been applied in initially calculating the Gross-up Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of such excess (plus any interest and penalties payable with respect to such excess) at the time that the amount of such excess is finally determined.

The Gross-up Payment provided for above shall be paid on the 30th day (or such earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that the Total Payments (or any portion thereof) are subject to the Excise Tax; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Company shall pay to Executive on such day an estimate, as determined by the Independent Advisors, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Executive, payable on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up Payment is made, the amount of each Gross-up Payment shall be computed so as not to duplicate any prior Gross-up Payment. The Company shall have the right to control all proceedings with the Internal Revenue Service that may arise in connection with the determination and assessment of any Excise Tax and, at its sole option, the Company may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with any taxing authority in respect of such Excise Tax (including any interest or penalties thereon); provided, however, that the Company’s control over any such proceedings shall be limited to issues with respect to which a Gross-up Payment would be payable hereunder, and Executive shall be entitled to settle or contest any other issue raised by the Internal Revenue Service or any other taxing authority. Executive shall cooperate with the Company in any proceedings relating to the determination and assessment of any Excise Tax and shall not take any position or action that would materially increase the amount of any Gross-up Payment hereunder.

19. Effect of Agreement on Other Benefits.

Except as specifically provided in this Agreement, the existence of this Agreement shall not be interpreted to preclude, prohibit or restrict Executive’s participation in any other employee benefit or other plans or programs in which he currently participates.

20. Assignability: Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of Executive) and permitted assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred in connection with the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company further agrees that, in the event of a sale or transfer of assets as described in the preceding sentence, it shall take whatever action it legally can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law, except as provided in Section 26 below.

21. Representation.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization.

22. Entire Agreement.

This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and, as of the Effective Date, supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto, including, without limitation any prior change in control agreement between the Parties, except for certain rights regarding Executive’s stock options granted after October 1996 and prior to the date of this Agreement, which shall be governed by the terms of Executive’s 1996 employment agreement as if such 1996 employment agreement remained in full force and effect.

23. Amendment or Waiver.

No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by Executive and an authorized officer of the Company. Except as set forth herein, no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy or shall be construed to be a waiver of or an acquiescence to any breach hereof. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be.

24. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

25. Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any termination of Executive’s employment to the extent necessary to the intended preservation of such rights and obligations.

26. Beneficiaries/References.

Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death by giving the Company written notice thereof. In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.

27. Governing Law/Jurisdiction.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of New Jersey without reference to principles of conflict of laws. Subject to Section 16, the Company and Executive hereby consent to the jurisdiction of any or all of the following courts for purposes of resolving any dispute under this Agreement: (i) the United States District Court for New Jersey or (ii) any of the courts of the State of New Jersey. The Company and Executive further agree that any service of process or notice requirements in any such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it or he may now or hereafter have to such jurisdiction and any defense of inconvenient forum.

28. Notices.

Any notice given to a Party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of:

If to the Company: Linens ’n Things, Inc.
6 Brighton Road
Clifton, New Jersey 07015-5108

Attention: Secretary

If to Executive: Ms. Audrey Schlaepfer
152 South Almont Drive
Los Angeles, California 90048

29. Headings.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

30. Counterparts.

This Agreement may be executed in two or more counterparts.

31. Terms of Initial Employment.

In addition to all the aforementioned terms described in this Employment Agreement, the Executive will be entitled to all terms of remuneration as described in the attached document, Addendum A.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

LINENS ’N THINGS, INC.


By: BRIAN SILVA
——————————————

Name:  Brian Silva
Title:  Sr. V.P. Human Resources and Corporate Secretary

EXECUTIVE


By: AUDREY SCHLAEPFER
——————————————
Audrey Schlaepfer